Here’s Scott’s view on $DXCM – June 5, 2023
TLO
This is Scott with your Chart of the Day. I want to take a quick look at DexCom ( NASDAQ: DXCM ). You can see since November of last year DexCom ( NASDAQ: DXCM ) has pretty much just been basing. It has been going sideways and it has a 7-month base of consolidation.
You can see this clear support zone down here at around 107.00, I will talk about this line here in just a minute. But I really want to show you this clear pivot to the upside right around this 125.00 zone. You can see how it couldn’t get above, couldn’t get above, try, try, try, try, try and now we are right underneath.
And so, I want to watch for a strong move above that 125.00, let’s say 126.00 level coming on volume. I am going to set an alert here on my chart for the next month, and because it is based for a long time I would feel a little more confident buying this stock on a breakout, even though it is extended above this cluster of moving averages.
If I measure this here you will see it’s about 5.5 percent, it is just under 5.5 percent right above that 50-day moving average, 5.49 percent off the 50-day. So it is a bit extended from what you would call a support zone. But the thing I like about DexCom ( NASDAQ: DXCM ) is this long base of consolidation.
And if we go back to 2021, let’s take a trip back in time and you will see that DexCom ( NASDAQ: DXCM ) has a history of this kind of long sloppy choppy bases. But when it does break above you can get some nice moves out of it. So if I measure from back here, from August-September of 2020, you can see this long sloppy choppy base going across with resistance right here, from back here, resistance, resistance, and resistance.
It finally did break above, and when it did break above this long base, this base goes almost 10 months across, you can see, once it did break out it gave you a nice move to the upside, just over 50 percent. So that is what I think could happen if DexCom ( NASDAQ: DXCM ) has the power to break out of its current base of consolidation. Though, this base is only about 7 months, not 9 months.
So I wouldn’t be surprised if this pulled back and did chop around a little longer before breaking out. But I want to be ready for it, so I am going to set that alert just around that 125.00-126.00 level and look for a strong move. So matter when it happens my software will alert me to that.
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